brokerage error resulting in loss

[Bernhard W. Stalzer]

A stock brokerage in Boston, MA through their error/omission has caused me and others substantial financial loss. I am a Florida resident, and dealt with their Florida office. They have E/O insurance, however, the Insurer does not want to pay policy limits and wants the brokerage to participate in any settlement beyond the normal deductible. They are not happy with their Insurer, but are reluctant to sue the Insurer because they will have to report the liability to the various regulatory bodies. They say that would put them out of business. The current offer to settle is a fraction of the loss sustained. MY QUESTIONS: If they were forced into bankrupcy could the Receiver be compelled to proceed with an action against the Insurer for recovery? Would a creditor in this situation have any special rights?

 

[lawrat]

I am a law school graduate. What I offer is mere information, not to be construed as forming an attorney client relationship.

Good questions. Usually both the insurer and insured are sued so as to cover both angles. If insured has to pay out of pocket, they can try to discharge it via bankruptcy and in essence become judgment proof.

See if there is a way to just take care of your situation by settling out.

 

[Bernhard W. Stalzer]

dear lawrat...the brokerage issue

Thanks lawrat! I understand the disclaimer. Can you provide some clarification? The E/O carrier is clearly the deep pocket and the problem as I see it. Are you saying that only the part of the claim that the Insured would have to pay, like the deductible, would be discharged? Would the claim against the E/O carrier survive the bankrupcy? At this point if the brokerage goes down the toilet, it is clearly of not much concern to me. Does the suit need to commence before or can it be after a bankrupcy commences? Settling is ok, however, not where the dollars are now. If things can develope, as I query above, I believe the Insurer will still want to continue to settle albeit the price will change!